The Kent City Council voted 7-0 on Tuesday night to approve a contract extension with Philadelphia-based SMG to market and operate the city-owned ShoWare Center.
The agreement will pay SMG $135,000 a year to run the $84.5 million arena that seats 6,024. The extension could run for as many as 10 more years.
SMG manages the day-to-day operations of the arena, including event booking, the budget, vendor selection, public relations and marketing, and event staffing. The company also has the food and beverage contract.
SMG received the council’s unanimous vote despite the arena losing $3 million since it opened in 2009. The city covers those losses with money out of its general fund.
“I think ShoWare is a good asset for the city,” Councilman Bill Boyce said prior to the vote. “It’s pretty clear it’s not where we want it to be from a financial standpoint, but I think that is on the table now. As the council and working with the administration and the mayor, our focus is to someday turn that red into black. …I strongly believe we will get where we want to go. We will get there.”
The contract includes two five-year terms. The city will have the option to end the agreement after year three in each of the five-year contracts. The previous contract was for three years.
“ShoWare is a tremendous asset to this community,” Council President Dana Ralph said. “It provides benefits across the board whether it’d be to support Kent Station, local businesses or just a place to go with your family. …But it doesn’t take away from the fact that we need to figure out how to run the building in a way that it generates revenue.”
The deal includes SMG paying $500,000 upfront for capital improvements to the facility. The city agreed to pay $50,000 annually to repay that $500,000 loan. Wolters said those changes could include updated and refreshed concession stands to create more revenue and possibly the addition of a pizza oven in the kitchen.
SMG also will waive the $200,000 final loan payment due to the company from the city at the end of this year. That is part of an original $700,000 loan from SMG as part of the initial food and beverage contract that allowed the city to purchase food and beverage equipment for the arena.
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